AGM trading update and publication of ESG report
25 April 2023
(EPIC: SRC / Market: AIM / Sector: Construction Materials)
SIGMAROC PLC
('SigmaRoc', the 'Group' or the 'Company')
Solid Q1 trading
Publication of the Group's ESG report
SigmaRoc, the specialist quarried materials group is pleased to announce the publication of its ESG report, together with the following update on Group trading for the first quarter of its 2023 financial year ('Q1' or the 'period'), in advance of its Annual General Meeting ('AGM') to be held at 3:00 pm today.
Highlights:
- Solid Q1 performance, with Group underlying EBITDA ahead of prior year and slightly ahead of management expectations;
- Development pipeline progressing to plan, with three acquisitions closed in Q1;
- Further progress made in sustainability initiatives with the installation of the first Aqualung module in Q2 and the publication of the Group's ESG report today, highlighting progress areas across a broad range of metrics;
- Revenue diversity and further margin enhancement programmes support the Board's expectations for 2023.
Q1 trading update
The Group is pleased to report that it has started 2023 well, with Q1 performance ahead of the prior year on a like-for-like basis. Volumes were 1% ahead of budget, contributing to revenues of £137.1m for the quarter. The ongoing benefit from cost management and asset enhancement programmes underpinned margin growth in the period, resulting in an Underlying EBITDA slightly ahead of management's expectations.
The Group's diversified geographic and end market footprint continues to provide resilience with growth across a range of segments, more than offsetting areas of subdued demand:
- Industrial minerals: continued growth in demand across chemical, environmental, and agricultural markets, as well as metals & mining which is seeing demand supported by re-activation of customer capacity. Paper, pulp & board saw lower demand in the quarter as safety stocks acquired to mitigate energy risk at the end of 2022 are unwound.
- Infrastructure: demand in this sector remained strong across all three regions, with particularly good performances in Poland and the Baltics. Several major projects in other regions are mobilising, supporting expected demand for construction materials across the Group.
- Residential construction and RMI: the more subdued demand conditions in Finland, Sweden and the UK seen in the latter part of 2022 have continued, as expected, into 2023. Conditions in Poland, the Baltics and Belgium have been stronger as a result of greater resilience in residential construction activity in these markets.
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Acquisition and development pipeline update
The Group made significant progress on its acquisition and development pipeline in Q1, closing three acquisitions and launching three development projects. Goijens Beton is presently being integrated into the Benelux concrete business and Juuan Dolomiittiikalkki has been integrated within the Nordics platform and is now delivering the expected synergies.
In the UK, the Group closed the acquisition of Retaining Holding Limited ('RHL'), a leading manufacturer of specialty retaining wall systems for an effective multiple of 2.9 times recurring average EBITDA for the years 2020 to 2022, before expected synergies and operational improvements. This business fits very well with the PPG precast platform, both expanding its range of walling solutions, which already includes the patented Alfabloc, as well as extending PPG's reach into the north of the UK. Integration has already started successfully and will aim to drive further synergies within this calendar year.
The Group also signed the lease and placed the order for a new asphalt plant to be installed later this year in the UK, which is currently expected to be operational in Q4.
Additionally, the Group is making good progress on its divestment programme and expects to close two non-core business units at attractive multiples within the month of May.
The pipeline of both organic and inorganic opportunities remains very full, offering the Group the ability to be selective with its investments and focus on those with the most compelling financial and strategic relevance.
Aqualung update
The Group's first Aqualung module will be installed over the next two to three weeks with commissioning targeted to start on 7th May 2023. Once installed and connected to a Nordkalk quicklime kiln, it will start a testing programme.
The Group aims to start capturing and bottling CO2 from its quicklime operations by the last week of May 2023. An official launch will be organised to celebrate this significant step in the Group's evolution, the details of which will be published in due course.
ESG Report publication
The Group is pleased to publish its second ESG report today, which contains comprehensive detail on its Environmental, Social and Governance policies and initiatives, as well as a detailed roadmap to Net Zero.
The report provides further detail on a large number of initiatives already in place across the Group to manage its energy use and sourcing, as well as accelerate its successful track record in innovation to both meet demanding ESG targets and further enhance competitiveness.
The report can be found on the Company's website at www.sigmaroc.com. In summary of the ESG report, we aim to:
- provide option for 100% of manufactured products to utilise waste/recycled materials by 2025;
- utilise 100% of production materials by 2027;
- be free of fossil fuel use by 2032; and
- achieve net-zero by 2040.
Trading outlook
Economic conditions continue to show a degree of volatility and so we remain alert to changes in our local markets, both positive and negative. In the near term, we expect the trends we have seen in Q1 to continue into the second quarter, with demand in the residential construction and pulp, paper & board markets remaining subdued. Conversely, we see continued demand resilience across the infrastructure, chemical, environmental, agriculture and metals & mining segments.
As has been the case in the first quarter, we expect local market agility and our internal improvement initiatives to support margins through the year, with the pricing and inflationary backdrop more stable than was the case in 2022. Execution on our investment pipeline continues in line with plan and it is encouraging to see synergy benefits being delivered already from acquisitions made in the last few months.
The Group's product, end market and geographic diversity, together with the local teams' ability to drive continuous improvement leave it well placed to navigate through any further economic volatility in 2023. The opportunities to enhance progress through the development pipeline are substantial and the Board remains very confident in the Group's ability to make further significant progress in the current year and beyond.
Max Vermorken, CEO, commented
"The Group delivered performance ahead of expectations in Q1, despite variable market conditions, leveraging its ability to focus activity on growth segments and achieve further margin gains through operational efficiency and active cost management.
The Group also made significant progress on its acquisition pipeline, with three important development projects initiated within the quarter.
We approach the remainder of 2023 with vigilance but are confident that the Group can demonstrate its resilience and achieve further strategic progress."
Information on the Company is available on its website, www.sigmaroc.com.
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SigmaRoc plc Max Vermorken / Garth Palmer
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Tel: +44 (0) 207 002 1080 |
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Liberum Capital (Co-Broker & Nominated Adviser) Nick How / Jamie Richards / Ben Cryer
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Tel: +44 (0) 203 100 2000
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Peel Hunt (Co-Broker) Mike Bell / Ed Allsopp
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Tel: +44 (0) 20 7418 8900 |
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Investor Relations Dean Masefield / Elisa Frenay |
Tel: +44 (0) 207 002 1080 ir@sigmaroc.com
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